Group “or” Company Life Insurance

Group Life Insurance or “company life insurance” is a benefit offered by employers to their workers. With a group life insurance policy, the insurance contract is between the group and the insurance company, with each employee receiving a certificate of coverage.

It is easy to qualify for group insurance because there are no medical questions.

Company insurance is often offered as a factor of your income, at no cost as part of your basic benefits package. Typically the death benefit is one or two times your annual salary

Many company sponsored plans also allow employees to purchase larger amounts of voluntary coverage at group rates. You will need to pay a premium for the additional coverage at the published group rate.

Most additional coverage requires a brief questionnaire about your medical history and occasionally an exam. There are few ideas to keep in mind when considering additional voluntary life coverage.

Company Voluntary Life Insurance (Group Life)

  • Coverage may not meet your individual needs – Policies are often only designed to provide standardized protection and benefits.
  • Costs generally increase –  Rates for coverage are age-based schedule (i.e. 55-59, 60-64) and go up in cost dramatically at older ages.
  • Your coverage may terminate if you leave your job or at retirement age – Most employer-sponsored group policy’s are term life insurance, and only covers you for as long as you’re working for the employer.
  • Your employer has the right to terminate the coverage age any time – This can be an issue when an employer decides to reduce benefits as a cost-cutting option.
  • Only some policies are portable – Portability allows employees to convert their insurance coverage to an expensive individual policy upon termination. Make sure you check with your benefits administrator on the portability of the voluntary coverage.

People considering voluntary coverage should also perform a long term cost comparison with individual term coverage purchased in the open marketplace.

If you are in good health, it is easy find a better deal shopping for an individual policy.

Nonsmokers in excellent health can generally qualify for a preferred plus or preferred rate class with premiums substantially lower than those offered through the group.

Not to mention, with an individual term life insurance policy you can lock in the rate your rates for 10, 15, 20 or even 30 years. With a group life policy, your premium will increase as you age (typically every 5 years).

If coverage is desired for a longer term duration, the cost savings can be even more substantial with a level term policy or guaranteed universal life.

So, before you automatically elect for additional group coverage, please get comparable quotes for an individual life insurance policy.

If you would like an cost analysis, do not hesitate to compare our rates with the  Instant Life Insurance Quote, or call us at 1-877-249-1358.

Eric Van Haaften, LUTCF is the president of Affordable Life USA. We are a nationally licensed life insurance agency focused on finding our clients custom planning solutions at excellent prices. 1-877-249-1358. eric@affordablelifeusa.com